IE warehouse vacancy hit 7.8% as big tenants moved out, but Q1 leasing jumped 45%

Citrus Belt Review: The vacancy figure, up 70 basis points from the prior quarter and 150 over the year, came almost entirely from big-box move-outs in the 500,000-square-foot-and-up range. CBRE names the departures: Keeco, Under Armour, Home Depot and Cubework each emptied over a million square feet across the IE Core, driving net absorption to negative 4.7 million square feet. Much of that space was older, Class B product, vacated as pandemic-era leases expire and tenants chase newer buildings — not demand walking out of the region.

What the vacancy number obscures is how much space tenants signed for at the same time. New leasing hit 13.6 million square feet, up more than 15% from a year earlier, led by build-to-suit deals and a Medline Industries lease of over a million square feet in the IE East. Asking rents kept sliding — down 3.5% over the year to $1.09 NNN, and off 29% over three years — which is exactly what's pulling occupiers back in. The gap between what landlords ask and what tenants actually pay has narrowed to a penny, a sign the two sides have stopped arguing over price.

The pipeline is the part operators should watch. Space under construction fell 65.5% year over year to 3.3 million square feet, after more than five million square feet delivered in the prior quarter, most of it empty. With almost nothing new coming and leasing running hot, CBRE expects vacancy and availability to start falling as the move-out blocks get absorbed. The region's pull — port proximity, freeway access, and rents well below the rest of Southern California — is doing the work the vacancy rate hides.